HSBC USA's Net Income Soars on Strong Net Interest Income, Securities Gains

TL;DR

**HSBC USA is crushing it, with net income more than doubling, making it a solid bet in a volatile market.**

AI Summary

HSBC USA Inc. reported a significant increase in net income for the three months ended September 30, 2025, reaching $378 million, a substantial rise from $88 million in the same period of 2024. For the nine months ended September 30, 2025, net income more than doubled to $827 million, up from $482 million in 2024. This growth was primarily driven by a robust increase in net interest income, which climbed to $525 million for the quarter (up from $439 million) and $1,574 million for the nine-month period (up from $1,277 million). Other revenues also saw a strong increase, reaching $548 million for the quarter, compared to $334 million in 2024, largely due to a positive swing in other securities gains (losses), net, from a loss of $148 million in 2024 to a gain of $26 million in 2025. Total assets slightly decreased to $169,890 million from $170,731 million at December 31, 2024, while total liabilities also saw a minor reduction to $157,899 million from $158,242 million. The company's provision for credit losses shifted from a charge of $84 million in Q3 2025 to a recovery of $13 million in Q3 2024, indicating improved credit quality. Strategic outlook appears positive with increased profitability, though a significant cash dividend of $1,500 million on common stock was declared for the nine-month period.

Why It Matters

This strong performance by HSBC USA Inc., particularly the significant jump in net income and net interest income, signals a healthy banking environment and effective management of interest rate dynamics. For investors, the substantial increase in profitability and the declaration of a $1,500 million common stock dividend for the nine-month period could indicate a strong return on investment and confidence from its parent company, HSBC North America Holdings Inc. Employees might see this as a sign of stability and potential for growth within the organization. Customers could benefit from a more robust and stable financial institution. In the broader market, this performance suggests resilience in the financial sector, potentially outperforming competitors in a challenging economic landscape.

Risk Assessment

Risk Level: medium — While net income surged, the company reported a provision for credit losses of $84 million for the three months ended September 30, 2025, a significant increase from a $13 million recovery in the prior year, indicating potential future credit quality concerns. Additionally, total assets slightly decreased from $170,731 million to $169,890 million, and total equity declined from $12,489 million to $11,991 million, primarily due to a $1,500 million cash dividend on common stock, which could impact capital buffers.

Analyst Insight

Investors should closely monitor future credit loss provisions and the impact of significant dividend payouts on capital ratios. While current profitability is strong, a deeper dive into the loan portfolio's health and the sustainability of 'other securities gains' is warranted before making long-term commitments.

Financial Highlights

debt To Equity

N/A

revenue

$1,073M

operating Margin

N/A

total Assets

$169.89B

total Debt

N/A

net Income

$378M

eps

N/A

gross Margin

N/A

cash Position

$1,099M

revenue Growth

+29.9%

Revenue Breakdown

Key Numbers

• $378M — Net Income (Q3 2025) (Increased from $88M in Q3 2024, a 329.5% rise.)
• $827M — Net Income (9M 2025) (Increased from $482M in 9M 2024, a 71.6% rise.)
• $525M — Net Interest Income (Q3 2025) (Increased from $439M in Q3 2024, a 19.6% rise.)
• $1,574M — Net Interest Income (9M 2025) (Increased from $1,277M in 9M 2024, a 23.3% rise.)
• $548M — Total Other Revenues (Q3 2025) (Increased from $334M in Q3 2024, a 64.1% rise.)
• $26M — Other Securities Gains (Q3 2025) (Shifted from a loss of $148M in Q3 2024.)
• $84M — Provision for Credit Losses (Q3 2025) (Increased from a recovery of $13M in Q3 2024.)
• $1,500M — Cash Dividends on Common Stock (9M 2025) (Significant payout impacting retained earnings.)
• $169.89B — Total Assets (Sep 30, 2025) (Slight decrease from $170.73B at Dec 31, 2024.)
• $11.99B — Total Equity (Sep 30, 2025) (Decreased from $12.49B at Dec 31, 2024.)

Key Players & Entities

• HSBC USA Inc. (company) — registrant and reporting entity
• HSBC North America Holdings Inc. (company) — wholly-owned parent company
• HSBC Holdings plc (company) — indirect wholly-owned ultimate parent company
• HSBC Bank USA, National Association (company) — principal U.S. banking subsidiary
• New York Stock Exchange (regulator) — exchange where notes are registered
• $378 million (dollar_amount) — net income for Q3 2025
• $88 million (dollar_amount) — net income for Q3 2024
• $827 million (dollar_amount) — net income for nine months ended Sep 30, 2025
• $1,500 million (dollar_amount) — cash dividends declared on common stock for nine months ended Sep 30, 2025
• $169,890 million (dollar_amount) — total assets at Sep 30, 2025

FAQ

Risk Factors

• Credit Loss Provisions [medium — financial]: The company recorded a provision for credit losses of $84 million in Q3 2025, a significant increase from a recovery of $13 million in Q3 2024. This indicates a potential deterioration in credit quality or a more conservative outlook on loan portfolio performance.
• Interest Rate Sensitivity [medium — market]: Net interest income is a key driver of profitability. Fluctuations in interest rates, as seen in the decrease in total interest income from $1,904 million to $1,946 million for the quarter, can impact net interest margin and overall earnings.
• Reliance on HSBC Affiliates [low — operational]: Significant support services are provided by HSBC affiliates ($432 million in Q3 2025). While this can offer efficiencies, it also represents an operational dependency that could pose risks if intercompany arrangements change.
• Regulatory Compliance [high — regulatory]: As a bank holding company, HSBC USA is subject to extensive regulation. Changes in regulatory requirements or failure to comply can lead to fines, sanctions, and reputational damage.
• Securities Portfolio Performance [medium — financial]: The company experienced a swing from a net loss of $148 million in other securities gains (losses) in Q3 2024 to a gain of $26 million in Q3 2025. Volatility in the securities portfolio can impact earnings.
• Dividend Payout [medium — financial]: A substantial cash dividend of $1,500 million was declared for the nine-month period. While positive for shareholders, large dividend payouts can reduce retained earnings and capital available for future investments or to absorb potential losses.

Industry Context

HSBC USA operates within the highly competitive U.S. banking sector, characterized by large national banks, regional institutions, and specialized financial firms. The industry is currently navigating a complex environment of evolving interest rate policies, increasing digital adoption by customers, and ongoing regulatory scrutiny. Banks are focusing on enhancing digital capabilities, managing interest rate risk, and maintaining strong capital buffers to ensure stability and profitability.

Regulatory Implications

As a subsidiary of a global financial institution, HSBC USA is subject to stringent U.S. banking regulations, including capital adequacy requirements and consumer protection laws. Changes in monetary policy and potential new regulations could impact its lending activities, investment strategies, and overall profitability. Compliance remains a critical operational focus.

What Investors Should Do

1. Monitor credit loss provisions closely.
2. Analyze the sustainability of revenue growth.
3. Evaluate the impact of the large dividend payout.
4. Assess the company's interest rate sensitivity.

Key Dates

• 2025-09-30: End of Q3 2025 — Reported net income of $378 million, a significant increase from $88 million in the prior year's quarter, driven by higher net interest income and a positive swing in securities gains.
• 2025-09-30: End of Nine Months 2025 — Net income reached $827 million, more than doubling from $482 million in the same period of 2024, reflecting strong operational performance.
• 2025-09-30: Declaration of Cash Dividend — A significant cash dividend of $1,500 million was declared, indicating a strong cash generation and a commitment to returning capital to shareholders.
• 2024-09-30: End of Q3 2024 — Reported net income of $88 million and a net loss of $148 million in other securities gains, highlighting the substantial improvement in Q3 2025.
• 2024-12-31: End of Fiscal Year 2024 — Total assets stood at $170.73 billion and total equity at $12.49 billion, providing a baseline for the slight decrease observed by September 30, 2025.

Glossary

Net Interest Income

The difference between the interest income generated by a bank and the interest it pays out to depositors and lenders. (A primary driver of profitability for banks, its growth indicates effective management of interest-earning assets and liabilities.)

Provision for Credit Losses

An expense set aside by a financial institution to cover potential losses from loans that may not be repaid. (An increase in this provision can signal concerns about loan portfolio quality, while a recovery suggests improved credit conditions or write-backs of previously provisioned amounts.)

Other Revenues

Includes various non-interest income sources such as fees, commissions, trading gains/losses, and other miscellaneous income. (Diversifies revenue streams and can be a significant contributor to overall profitability, especially when non-interest income sources perform well.)

Securities Available-for-Sale

Investments in debt or equity securities that are not classified as trading or held-to-maturity, and are reported at fair value with unrealized gains/losses in other comprehensive income. (The performance and valuation of these securities can significantly impact a bank's capital and comprehensive income.)

Comprehensive Income

Includes net income plus all other gains and losses that are not included in net income, such as unrealized gains or losses on certain investments. (Provides a broader view of a company's financial performance by including items that affect equity but are not part of the income statement.)

Federal Funds Sold and Securities Purchased Under Agreements to Resell

Short-term lending activities where banks lend excess reserves to other banks or purchase securities with an agreement to resell them. (Represents a component of a bank's short-term liquidity management and investment portfolio.)

Year-Over-Year Comparison

HSBC USA Inc. has demonstrated a significant improvement in profitability compared to the prior year. Net income for the nine months ended September 30, 2025, more than doubled to $827 million from $482 million in 2024, driven by a robust increase in net interest income and a favorable swing in other securities gains. Total assets and liabilities saw a slight decrease, indicating a stable balance sheet. However, the provision for credit losses shifted from a recovery to a significant charge, which warrants close monitoring for future periods.

Key Financial Figures

• $100,000,000 — e of Each Exchange on Which Registered $100,000,000 Zero Coupon Callable Accreting Notes du
• $50,000,000 — , 2043 HUSI/43 New York Stock Exchange $50,000,000 Zero Coupon Callable Accreting Notes du

Filing Documents

• hsbcusa-20250930.htm (10-Q) — 7819KB
• exhibit319302510-q.htm (EX-31) — 19KB
• exhibit329302510-q.htm (EX-32) — 11KB
• hsbcusa-20250930_g1.jpg (GRAPHIC) — 34KB
• 0000083246-25-000029.txt ( ) — 36994KB
• hsbcusa-20250930.xsd (EX-101.SCH) — 118KB
• hsbcusa-20250930_cal.xml (EX-101.CAL) — 131KB
• hsbcusa-20250930_def.xml (EX-101.DEF) — 981KB
• hsbcusa-20250930_lab.xml (EX-101.LAB) — 1277KB
• hsbcusa-20250930_pre.xml (EX-101.PRE) — 1209KB
• hsbcusa-20250930_htm.xml (XML) — 10613KB

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited): Consolidated Statement of Income 3 Consolidated Statement of Comprehensive Income 4 Consolidated Balance Sheet 5 Consolidated Statement of Changes in Equity 7 Consolidated Statement of Cash Flows 8 Notes to the Consolidated Financial Statements 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations:

Forward-Looking Statements

Forward-Looking Statements 76 Executive Overview 78 Basis of Reporting 79 Balance Sheet Review 80 Results of Operations 85 Segment Results - Group Reporting Basis 93 Credit Quality 99 Liquidity and Capital Resources 106 Fair Value 110 Risk Management 111 Consolidated Average Balances and Interest Rates 116

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 118

Controls and Procedures

Item 4. Controls and Procedures 118 Part II

Legal Proceedings

Item 1. Legal Proceedings 118

Other Information

Item 5. Other Information 118

Exhibits

Item 6. Exhibits 120

Signatures

Signatures 121 2 HSBC USA Inc. PART I

Financial Statements

Item 1. Financial Statements CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions) Interest income: Loans $ 886 $ 950 $ 2,654 $ 2,782 Securities 517 481 1,483 1,388 Trading securities 90 94 268 268 Short-term investments 398 403 1,240 1,261 Other 13 18 47 57 Total interest income 1,904 1,946 5,692 5,756 Interest expense: Deposits 913 1,046 2,763 3,095 Short-term borrowings 126 162 391 472 Long-term debt 325 282 919 865 Other 15 17 45 47 Total interest expense 1,379 1,507 4,118 4,479 Net interest income 525 439 1,574 1,277 Provision for credit losses ( 84 ) ( 13 ) 76 36 Net interest income after provision for credit losses 609 452 1,498 1,241 Other revenues: Credit card fees, net 14 14 45 42 Trust and investment management fees 43 37 125 107 Other fees and commissions 176 157 503 503 Trading revenue 186 208 570 717 Other securities gains (losses), net 26 ( 148 ) 35 ( 138 ) Servicing and other fees from HSBC affiliates 99 99 299 280 Gain (loss) on instruments designated at fair value and related derivatives ( 3 ) ( 3 ) ( 7 ) ( 33 ) Other income (loss) 7 ( 30 ) 12 ( 68 ) Total other revenues 548 334 1,582 1,410 Operating expenses: Salaries and employee benefits 145 145 454 423 Support services from HSBC affiliates 432 428 1,292 1,246 Occupancy expense, net 13 12 37 53 Other expenses 71 86 234 318 Total operating expenses 661 671 2,017 2,040 Income before income tax 496 115 1,063 611 Income tax expense 118 27 236 129 Net income $ 378 $ 88 $ 827 $ 482 The accompanying notes are an integral part of the consolidated financial statements. 3 HSBC USA Inc. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (in millions) Net income $ 378 $ 88 $ 827 $ 482 Net change in unrealized gains (losses), net of tax: Investment securities 147 550 35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note Page Note Page 1 Organization and Presentation 9 11 Fee Income from Contracts with Customers 43 2 Trading Assets and Liabilities 10 12 Related Party Transactions 44 3 Securities 11 13 Business Segments 46 4 Loans 15 14 Retained Earnings and Regulatory Capital Requirements 50 5 Allowance for Credit Losses 28 15 Variable Interest Entities 51 6 Loans Held for Sale 31 16 Guarantee Arrangements, Pledged Assets and Repurchase Agreements 53 7 Goodwill 32 17 Fair Value Measurements 58 8 Derivative Financial Instruments 32 18 Litigation and Regulatory Matters 74 9 Fair Value Option 38 19 New Accounting Pronouncements 75 10 Accumulated Other Comprehensive Loss 41 1. Organization and Presentation HSBC USA Inc. ("HSBC USA"), incorporated under the laws of Maryland, is a New York State based bank holding company and a wholly-owned subsidiary of HSBC North America Holdings Inc. ("HSBC North America"), which is an indirect wholly-owned subsidiary of HSBC Holdings plc ("HSBC" and, together with its subsidiaries, "HSBC Group"). The accompanying unaudited interim consolidated financial statements of HSBC USA and its subsidiaries (collectively "HUSI") have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, as well as in accordance with predominant practices within the banking industry. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. HSBC USA's principal U.S. banking subsidiary is HSBC Bank USA, National Association (together with its subsidiaries, "HSBC Bank USA"). In the opinion of management, all normal and recurring adjustments considered necessary for a fair statement of financial position

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